Journal article
Bank green lending and credit risk: an empirical analysis of China's Green Credit Policy
- Abstract:
- This study empirically investigates the relationship between banks' green lending and their credit risk, and how Chinese green finance regulations contribute to the solvency of individual banks and the resilience of the financial system. Analysing a sample of 41 Chinese banks from 2007 to 2018, we find that the association between a bank's (relative) green lending as a proportion of its overall loan portfolio, and its credit risk, depends critically on the size and structure of state ownership. While the implementation of China's Green Credit Policy reduces credit risk for the major state-controlled banks, it increases credit risk for the city and regional commercial banks. This performance difference appears largely due to information and expertise asymmetries, with the city and regional commercial banks having less access to information and expertise necessary to evaluate the credit risk of green lending. Understanding this phenomenon can help policymakers tailor green finance policies according to banks' characteristics. It also suggests that mechanisms and platforms for the city/regional commercial banks to learn from the major state-controlled banks could be beneficial.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
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(Preview, Version of record, pdf, 3.1MB, Terms of use)
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- Publisher copy:
- 10.1002/bse.2973
Authors
- Publisher:
- Wiley
- Journal:
- Business Strategy and the Environment More from this journal
- Volume:
- 31
- Issue:
- 4
- Pages:
- 1623-1640
- Publication date:
- 2022-01-18
- Acceptance date:
- 2022-12-26
- DOI:
- EISSN:
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1099-0836
- ISSN:
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0964-4733
- Language:
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English
- Keywords:
- Pubs id:
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1125468
- Local pid:
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pubs:1125468
- Deposit date:
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2023-02-01
- ARK identifier:
Terms of use
- Copyright holder:
- Zhou et al.
- Copyright date:
- 2022
- Rights statement:
- © 2022 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.
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